Since the 1900s, the way we do business has been largely built on hierarchies. This has been a way of leveraging skills and efficiencies for maximum effect. More educated, experienced or trained workers migrate to the top of the pyramid, managing larger groups under them. It looked a lot like this:

This model has worked well for distribution of work. But it is problematic when it comes to building loyalty. Over the last century, an employee’s formal relationship and emotional connection with a company has depended almost entirely on just these few links, upward to a manager, and laterally to people in the same workgroup. This is why we so often have seen the critical importance of a worker’s relationship to a manager, as an indicator of engagement and retention.

That’s all well and good for management, but any computer engineer will tell you this is a deeply flawed architecture if you want to ensure someone is well connected to the whole. See how few links there are? Just one breakdown along the way can isolate whole portions of the network. One bad manager can become a single and catastrophic point of failure for affective commitment.

Over the years, we have learned a lot from the design of computer networks. When those networks were first conceived, many were set up in bus, star, ring or hierarchical (tree) topologies, like most of those below:

In these rudimentary networks, any individual node was connected to the rest by just one or two links. Like the org chart above, a failure in one or two nodes would cut off communication to the rest of the network. In a tree or star network—the closest to a workplace hierarchy—failure in the primary or central node meant the whole network might be lost.

So where networks needed resilience, they got smarter and increased their connections to a fully connected or mesh framework. In fact, the only reason the Internet is so powerful and ubiquitous is that it is a true, fully connected mesh topology, where nodes are connected to multiple other nodes. If nodes fail, the rest of the network can continue on unaffected. Can you imagine what would happen if the internet were organized like the typical workplace hierarchy?

In fact, the Internet itself has so many redundancies in it, by 2005 it looked a lot like this:

Networks are safer because they have built in redundancies. They increase the flow of information. They speed communication. They connect larger groups that otherwise might remain siloed. They homogenize culture. They increase diversity of perspective and experience. They encourage innovation. They provide resilience in the event of trauma. And most critically, they protect against the failure or loss of an important connection point, such as a poor manager or the departure of an influential colleague.

The good news is that companies are rarely at this sort of risk for failure. Actual work relationships rarely follow the stark formal organizational chart hierarchies. Relationships naturally form in ways that reflect how people are interacting and investing in one another. Even without encouragement, people tend not to stick to strict hierarchical relationships. Research firm McKinsey has done a lot of work on this topic, stressing the importance of social networks (the emotional kind, not the Facebook kind) in organizations. Consider this chart that shows what your company’s network might really look like, versus the formal hierarchy:

McKinsey research reveals that the network you think you’ve created isn’t always the same as the network you have in your organization.

But this illustration also reveals the bad news. There could be weak points in your company’s emotional networks that you don’t know about. Many companies lack the tools (like a social recognition platform) to be able to identify and map these informal networks and connections among workers, never mind to encourage them to grow and become more secure and redundant. Without them you might have key influencers whose departure would put your morale in jeopardy–and not even know it. Or you may lack the resources to leverage these cultural energizers for things like change management. According to a recent McKinsey Quarterly article:

“The boxes and lines of formal organizational charts mask myriad relationships in networks that crisscross the borders of functions, hierarchies, and business units. These networks define the way work actually gets done in today’s increasingly collaborative, knowledge-intensive companies. Little wonder that total-quality- management projects and the re-engineering of business processes—to take just two examples of organizational-change efforts that largely ignore these essential but invisible networks— fail at least two-thirds of the time.”

But a natural network, unchecked, might grow dangerously dependent on one or two people. A few years back, McKinsey did a report on informal networks within organizations and showed the danger of not knowing who your most important employees are. They call these key influencers “linchpin” employees.

As you can see in the above illustration, the connections between your employees might be so fragile that the departure or failure of one employee might leave others feeling cut off or abandoned. That’s why it is so critical that we encourage redundencies.

The lesson here is twofold:

1. Reinforce and grow emotional networks
Many companies are working to establish informal relationship networks to support more traditional management hierarchies. By giving workers opportunities to connect, thank, recognize and form relationships across and among workgroups and functions they are able to establish a safety net that increases workers’ affective commitment to the organization. Management hierarchy is unlikely to disappear any time soon (despite some pioneering companies like Valve, who have abolished management), but there is no reason that we cannot encourage a fully connected mesh network in a pyramid shape. It might look something a bit more like this (but with even more lines):2. Visualize and understand your networks
Cultivate tools that will help you to see your culture and the informal connections among employees. Identifying those key individuals who are “cultural energizers” with high influence is an important step for retention, change management and engagement. Says McKinsey: “In our experience, companies that invest time and energy to understand their networks and collaborative relationships greatly improve their chances of making successful organizational changes. Sophisticated approaches can map networks and identify the key points of connectivity where value is created or destroyed.” (That might look a lot like the social graph and talent maps in our recognition platform.)

The conversation about hierarchies and networks is not a new one, but it is one that is growing more critical and timely. 2014 is sure to see a majority of companies actively looking for ways to build affective commitment, engagement and retention through stronger emotional ties and interconnected networks. Ways like recognition.

17 Responses to Culture is a network, not a hierarchy

This is a fantastic article! Thank you for all your insights. With the shift in the workforce pool, applying these 2 concepts towards solidifying a corporate culture becomes a necessary strategy. The new generation of Millennials is built around social networking (be it Facebook, or not). And they are very often influenced by the linchpin employee. I often advise companies to find these employees when they set up a corporate wellness initiative. It’s a sure way to get the program going and see fast ROI.

Your point about the transition from hierarchies to networks is spot on and apparent in companies that are most successful, Google, Starbucks, Southwest Airlines. To foster these networks effectively, I think companies need at least three things:
1) Broad understanding of the business economics, so the troops are pulling in the same direction to improve the value of the company
2) Transparency, so performance can be seen throughout the company and continually improved
3) Aligned team base incentives, so improved business results translate into improved employee compensation
This is why many companies I have worked with find open book principles so powerful. By its very nature, open book creates information flows through the company, which all benefit from. Southwest Airlines is a good example. I remember working ground crew with other SWA pilots in Orlando several years ago, something unheard of at other airlines. The SWA employees have a much better understanding of how they affect the company’s financials, and have participated in profit sharing for year, not to mention avoiding bankruptcy, as all the other major carriers have experienced. Hundreds of additional companies I have worked with have benefitted from applying open book principles, albeit SWA is better known than many of the small or midsized companies. A good starting point is captured in this Harvard Business Review article: http://blogs.hbr.org/2013/12/a-winning-culture-keeps-score/

Darcy
An excellent article. Reading it from a PM / change perspective it highlights the new world in which we must now work to deliver change within organisations. I would welcome connecting with you on LinkedIn – please send an invite if this is of interest. I am not hard to find!
Donnie

The transition from pyramidal dependence of layers of responsible action based on task clarity, specialization and measurement of results is distributing the interlayer dependence to across vertical interdependence and demands instantaneous feedback to interface frictions caused by external environmental happenings from other systems operating and demanding / competing for same resources. Cloud can accommodate any number of networks to coexist and grow into bigger and complex networks. The danger of one or two linchpins connecting the networks as anchors will cease as each node in the network gains strength to influence others equally shifting the lynch pin effect across thee network. Indian Politics is a classic example of this transition.

I have 4 millennial children and they think that the world runs on a mesh model. I was trying to explain this to a friend and was not successful. I will use this excellent article to demonstrate what I was trying to say.
Thank You

I do like the way you have framed this particular difficulty plus it does indeed present me personally some fodder for consideration. On the other hand, from what I have experienced, I simply hope when other comments pile on that people today keep on point and in no way get started on a soap box regarding the news of the day. Anyway, thank you for this exceptional point and even though I do not really concur with it in totality, I respect the standpoint.

I do like the way you have framed this particular difficulty plus it does indeed present me personally some fodder for consideration. On the other hand, from what I have experienced, I simply hope when other comments pile on that people today keep on point and in no way get started on a soap box regarding the news of the day. Anyway, thank you for this exceptional point and even though I do not really concur with it in totality, I respect the standpoint.